Axis Bank to step up lending to small businesses

Private sector lender Axis Bank today said it will maintain its growth in the Small and Medium Enterprises (SME) segment and is targeting to grow the loan book by up to 25 per cent over the next two years, despite concerns over asset quality in the context of rising interest rates.

The bank holds a 5 per cent market share in the overall SME segment at present, which gives it enough scope to grow, said Mr Rajendra D. Adsul, President, SME for Axis Bank.

Admitting that higher interest rates are adversely affecting the corporate sector and the SMEs, Mr Adsul said that the bank is not experiencing any stress from its clients. “We have not received requests for restructuring of loans from SMEs,” he added.

Mr Subir Gokarn, RBI's Deputy Governor, had recently said at an SME summit, that banks need to be cautious and balance their risks while lending to SMEs.

The SME portfolio at present constitutes 15 per cent of the bank's overall loan book, which stood at Rs 1.40 lakh crore as on September 30 and the bank will grow its SME book by 20-25 per cent over the next two years.

Engineering, infrastructure and pharmaceuticals are the sectors in the SME space that the bank feels are doing well and commercial real estate, export-oriented companies and textiles are among those where the bank is cautious about lending.

The bank currently serves the segment through 32 SME centres and six SME cells.